Government Demands Answers on $10 Million Contract Hike

Cybersecurity Deal with Politically Linked Firm Collapsed

Queensland’s current government is scrutinizing a significant increase in a cybersecurity contract awarded by the previous Labor administration. The deal, which ultimately failed, was for $10 million more than initially planned and went to a company with political ties.

Contract Awarded Days Before Caretaker Period

Cryptoloc Holdings secured the contract to assist Queensland’s small businesses with cybersecurity last September. The announcement came just one day before the state government entered its election caretaker mode.

The contract soured after reports surfaced in November detailing severe financial issues linked to another company associated with Cryptoloc. The state government initiated inquiries, leading to the contract’s cancellation in January.

Minister Blames Predecessors

During a parliamentary estimates hearing, Open Data Minister Steve Minnikin of the LNP pointed the finger at the former Labor government for the contract’s demise. He also highlighted donations made by Cryptoloc entities to Labor events, omitting LNP’s own receipt of donations.

“The [previous] government announced the awarding of the cybersecurity tender just hours before the election caretaker period began,” he stated. “It took one briefing … from my department, within a week or two of me taking office, for me to realise that something just wasn’t right.”

—Steve Minnikin, Open Data Minister

Minnikin indicated an “amber flag” regarding the company’s capacity to manage ongoing payments.

Funding Doubled Unexpectedly

Minnikin also questioned the Labor government’s decision to increase the cybersecurity project’s allocation from approximately $5 million in 2023 to $15 million in the subsequent budget. This escalated funding was announced less than four months before the contract was awarded.

“It just doesn’t add up.”

Budget papers had described the $15 million commitment as vital for fostering “a thriving, resilient small business sector.” Minnikin asserted that the opposition owed serious explanations.

Opposition Defends Budget Increase

An opposition spokesperson defended the budget increase, stating it was intended to bolster cybersecurity for small businesses and that procurement was handled by the department. They reiterated that the department independently awarded the contract and that donations did not influence the tender process.

Company Collapse and Liquidation Probe

The state had already disbursed $1.9 million to Cryptoloc Holdings. However, the project was terminated due to Cryptoloc’s alleged failure to provide adequate responses to queries.

The government initiated the company’s liquidation, seeking to recover nearly $1.5 million in advanced funds. Reports indicate that Cryptoloc’s founder, Jamie Wilson, has since declared bankruptcy. He denies any wrongdoing, maintaining that the company fulfilled its contractual obligations.

The liquidator for Cryptoloc Holdings is investigating the rapid transfer of state funds to Mr. Wilson‘s personal bank account within 24 hours of receipt. This transaction is being examined as a potential fraudulent activity, though Mr. Wilson claims an offset arrangement was in place.